Case Study

Literature

Govt launches new 'rent to buy' programme

29th September 2014

A new 'rent to buy' scheme has been launched by the government as a further measure to help boost the rate of construction.The £400 million programme is intended as a follow-up to successful initiatives like Help to Buy, which has enabled 53,000 households to buy a home with a fraction of the deposit they would normally require.Housing associations and other providers will be able to bid for a share of the fund, which is being made available in the form of low-cost loans.This will facilitate the construction of up to 10,000 new homes across the country, which will be built from 2015 to 2018 and mainly consist of one and two-bedroom apartments.Landlords will need to make the homes available for rent at below-market rates for a minimum of seven years. This will give tenants the chance to save up their money and prepare to buy their own property.At the end of the period, the tenant will have first refusal to buy the property. However, they may alternatively choose to move out and buy a different property, or rent another property either privately or with the housing association.Proceeds from the sale of these homes could be use to build more affordable homes in the area, while landlords may also look to rent their properties at an affordable rate to another tenant who needs help to buy.Half of the money, which forms part of the government's £23 billion affordable homes programme for 2015 to 2018, will be available in London, with bids made through the Greater London Authority.Communities secretary Eric Pickles said: "Both house building and the number of first time buyers are now at their highest rate since 2007. But there is more to do. "As part of our wider housing programme, this new scheme will help increase the provision of low-cost rented accommodation and provide a springboard for young people to upgrade to home ownership down the line."